Jaypee Group shares gain after UltraTech buys cement units

JP Associates, Jaypee Infratech and JP Power Ventures rallied by more than 10% each on the NSE.

Shares of Jaypee Group companies such as Jaiprakash (JP) Associates, Jaypee Infratech and Jaiprakash Power Ventures have rallied by up to 16% in an otherwise rangebound market after UltraTech Cement has signed the definitive agreement to buy JP Associates' 21.2 million tonnes per annum (mtpa) cement capacity for Rs 15,900 crore.

Among the individual stocks, JP Associates has rallied 17% to Rs 9 on the National Stock Exchange (NSE) on back of two-fold jump in trading volumes. A combined 42.22 million shares changed hands on the BSE and NSE till 09:57 AM.

Read more from our special coverage on "ULTRATECH CEMENT, JAIPRAKASH ASSOCIATES"

• Jaypee Group stocks gain on cement biz deal with UltraTech Cement
• UltraTech calls off Rs 5,400 cr deal with Jaiprakash for MP units

Jaypee Infratech surged 16% to Rs 9.60, while JP Power Ventures gained 13% to Rs 5.25 on the NSE in intra-day trade so far. UltraTech Cement was up nearly 1% at Rs 3,246 as compared to a marginal 0.09% decline in Nifty 50 index.

In the revised deal announced the management of UltraTech has decided to exclude one plant of 1.2 mtpa based out of Karnataka and the deal value has accordingly been reduced to Rs 15,900 crore compared to Rs 16,500 crore earlier.

The brokerage house Angel Broking said while the deal will take UltraTech's cement capacity to over 91 mtpa from the present 68 mtpa, it will help Jaypee group reduce its debt. Post the deal, Jaypee will continue to have 10.6 mtpa of cement capacity.

UltraTech has plans to take over Jaypee's Rs 11,500 crore debt as part of the deal, which will be re-financed by it at lower rates due to its good credit rating. For the rest Rs 4,400 crore, UltraTech will fund it by taking additional debt which it would raise on its own balance sheet. An additional Rs 470 crore will be paid by UltraTech once the grinding unit is completed.